You can burn B-ray format on a DVD at one condition : less than 30 minutes, try something short may be 5 or 10 minute you need a B-ray burner and a B-ray player. Normally B-ray is 4 times bigger than DVD.
PhotoStory really isn't a video application, though it can use video clips in the project. I do not have .m2ts files, but I do have .mts (AVCHD) files on my system.
I am able to load in the .mts file and export it out or burn it to DVD (not Blu-ray Disc). It will convert to the necessary standard for burning to disc.
But also keep in mind what yvon-robert said, time is really a factor here if your wanting to burn the AVCHD, Blu-ray quality to DVD.